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Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire

Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $5,000. At the date the partnership ceases operations, the balance sheet is as follows:

Cash $ 50,000 Liabilities $ 40,000
Noncash assets 150,000 Alex, capital 90,000
Bess, capital 70,000
Total assets $ 200,000 Total liabilities and capital $ 200,000

Part A: Prepare journal entries for the following transactions:

  1. Distributed safe cash payments to the partners.
  2. Paid $30,000 of the partnerships liabilities.
  3. Sold noncash assets for $160,000.
  4. Distributed safe cash payments to the partners.
  5. Paid remaining partnership liabilities of $10,000.
  6. Paid $4,000 in liquidation expenses; no further expenses will be incurred.
  7. Distributed remaining cash held by the business to the partners.

  1. Part B: Prepare a final statement of partnership liquidation.

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